Cryptos Tumble After India Says It Will "Take All Measures To Eliminate" Their Use

India's government became the latest country to declare its opposition to bitcoin payments, saying it would do everything in its power to eliminate the use of cryptocurrencies.

“The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,” Finance Minister Arun Jaitley told lawmakers in New Delhi on Thursday. However, while blasting bitcoin, the Indian finmin announced that India would embrace blockchain "The government will explore use of blockchain technology proactively for ushering in digital economy."

The news sent the crypto space sliding, with Bitcoin now well below its recent support level around $10,000. Curiously, Ethereum has been largely spared the recent rout, and remains up +30% YTD, while Bitcoin is down -30% in 2018.

Since reaching a peak of almost $20,000 in early December after the introduction of futures contracts on regulated exchanges in the U.S., a series of negative news has buffeted Bitcoin and rival cryptocurrencies, with losses intensifying since the start of 2018. Bitcoin’s January slide knocked $44.2 billion off the $200 billion in market value generated in all of 2017, the biggest one-month loss in dollar terms in the short history of digital assets according to Bloomberg.

Having failed previously in the "control" of capital outflows via gold, the Indian government - following a Reserve Bank of India advisory - last month raided one bitcoin seller and issued a warning cautioning citizens against acquiring and trading virtual currencies. The scrutiny led to several exchanges in India to suspend operations amid fears they could violate anti-money laundering and financial terrorism laws. Indeed, as Bloomberg reports, India's income tax officials started investigating the exchanges for potential violations shortly after issuing the warning.

The federal government had also set up a panel to decide on India’s stand on virtual currencies, people with knowledge of the matter said on Dec. 12.

The employees and owners of the country's crypto exchanges are, understandably, nervous.

"After today’s announcement, people are getting scared," said Anshul Vashist, Delhi-based support manager at the cryptocurrency exchange Coinsecure. "We have seen some dumping of bitcoins." Coinsecure has a volume of about 100 coins a day, he said.

The announcement is the latest disappointing news to hit the price of bitcoin - which has dropped more than 50% in a little over a month - during one of the pioneering cryptocurrency's worst weeks in recent memory. It's latest leg lower began following reports that the CFTC subpoenaed Bitfinex - believed to be the world's most active bitcoin exchange - and Tether - a separate company that's run by the same people, stoking suspicions that the exchange could be hiding missing funds used to back a popular dollar-backed cryptocurrency called tether. On the other hand, concerns that South Korea - one of the world's biggest crypto markets - would shut down bitcoin trading were put to rest after the nation yesterday said it had no plans to pursue such a strategy, news of which catalyzed the first sharp move lower in cryptos.

Comments

I’ve been a BitCoin cynic since before Satoshi Nakamoto played Mr. Miyagi in The Karate Kid.

Well… Yesterday, I finally bought my first BitCoin! It is supposed to arrive between Feb.22 and Mar.24 from Hong Kong. It is made of Iron, gold-plated, 1.5” in diameter, and it costs only $0.99 a piece!

Now, I gotta find a BitCoin Exchange, so I can start day-trading it as soon as it arrives.

But that $0.99 would be free from the banking system, that is what I think is really happening here. People trying to put money out of the banking system to stop government stealing it to prop up their failed economies.

I knew bitconnect was fucked months ago. I always thought that place was a scam. Same foe anyone that owns Veritaseum. Another BS fucking scam.

Quote from the NY Times article you linked: "Long before news of the subpoena, Bitfinex, which is believed to host more trading than any other Bitcoin exchange in the world, had gained a reputation for a lack of transparency and a confusing structure, with European executives, offices in Asia and registration in the Caribbean."

Tether coming to a head. Mos is right. It is getting out there now, and it will probably blow in the next week. Tether did destroy their first 30 million tokens, but looking at the creation history of them (really cool checking out the blockchain) tells me that there is no way this is legit. Creating 100 million at a clip, almost everyday for a week or so.

India hates anything that empowers the individual. They banned cash for cripessakes. Gold survives but that is simply due to history. They would ban that if they could.

With the avalanche of fiat money pouring into cryptocurrencies over the last six months, why is it so surprising that Tethers were being created at a furious pace? Isn't that pretty much exactly what you'd expect?

Tether needs to get their shit sorted, but that's not where the fraud is IMO. If there's a racket going on, it's going on inside Bitfinex, not inside Tether. Tether can be quickly made transparent with an outside audit. The internal workings of an exchange, on the other hand, are pretty much a black box.

Bitfinex must have made tons of money via that scheme by now. Fee income, prop trading with other people's money, perhaps some front-running of client order flow (A delayed order flow by 0.5-1 seconds would be more than sufficient and few would even notice it). I am sure, tether is a scam, and likely wasn't backed by real $$ in the beginning. By now it could well be. These guys running tether/bitfinex don't look like morons.

"India hates anything that empowers the individual. They banned cash for cripessakes. Gold survives but that is simply due to history. They would ban that if they could."

Yes the Indian government can ban cash because they print the cash and control its flow. They failed at banning gold because they couldn't control its flow. They will fail at banning Bitcoin because gold and Bitcoin go together like peas and carrots.

I agree. When P2P exchange becomes easier watch out. It will explode all over the third world, as well as the first world.

P2P will make crypto commonplace in the secondhand market. Paypal is dead if P2P crypto payments accelerate. Actually eBay just announced they are moving to another payment processor. The future is not going to be 2-3% transaction fees by scalpers. It will be pennies.

Time will tell who might edge out some of the big boys. Master Card made some big money last month facilitating crypto purchases. They will make more next month lending to those same people to help them pay their bills once their crypto money for nothing dreams are crushed.

Most peoples assets are encumbered by the debt behind them, illiquid because of their nature or non existent because they are capital poor. So it seems that some huge rush to "protect wealth" in the crypto space is not likely. Especially now that the parabolic up trend has been solidly interrupted.

For merchants the prospect of accepting payment in the form of such unstable "currencies" is not nearly as interesting now that the trend is not up every day. Added to the variety of other obstacles in the utilization and acceptance of these payment protocol tokens it is going to be a while yet before a clear winner emerges.

BTC $8820............. look out below.

Can you smell the visceral fear of the latecomers ????

Those that get burned will not jump back in any time soon, another obstacle to acceptance.

“The government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities or a part of the payment system.”

Still bad news...

But saying something isn't legal money and they'll ban its use from PAYMENT SYSTEMS

iiiiiis kiiiiiinda different than saying it's illegal or banning its use... PERIOD o.0

"Bitconnect is right. Those guys had literally all the warning in the world and they still lost everything. They had their C&D letters, and Tether has had its CFTC subpoena."

Anybody with an IQ above 110 who bothered to spend five minutes taking a hard look at Bitconnect could figure out it was a literal ponzi scheme. Tether on the other hand has a legitimate purpose. Whether that purpose is being misused or abused by Bitfinex is an still an open question that reasonable people can disagree on until an auditor can get inside Tether.

Of course, Tether (or some other fiat-tied coin) has a purpose - the question is whether they are actually conducting business in a legitimate fashion. I highly doubt that Tether is backed by $2Bil liquid USD right now...

Each exchange should form their own version (or versions). Could you imagine if Binance had Tether-type coins for Rubles, FRNs, Yuan, and Yen?

This has nothing to do with CFTC investigating or "regulating". It's using leverage on Bitfinex to increase the naked shorting of all cryptos to destroy them. The headline about India is a convenient or synchronized diversion. Bitfinex won't be closed down, it's an essential tool to kill cryptos.

That's silly. Bitfinex/tether are a dream business right now. Why should they want to kill their own revenue stream? makes no sense. And you can short BTC on kraken (the market leading exchange) or quoinex and half a dozen other exchanges, too.

It's funny seeing fanboys trying to counter his arguments. Tells me that this sector is primed for a bleeding out the ass crash.

"It's all FUD, blah blah blah."

I didn't pay attention to the dot com explosion, but this must be what it was like.

Bitfinex'ed really took the to town, and now it looks like his work is going to pay off. It is not going to be pretty, and he will be universally hated by those who use FUD as a normal term of conversation.

I did pay attention to the .com bubble and this is EXACTLY what it was like.

It's always good to pay attention to the quality of arguments on either side of an issue before making a decision as to what "side" to take, locking yourself into a mindset where your bias takes over. Rick Falkvinge made a good presentation on this topic: https://www.youtube.com/watch?v=QbvtAlmfYQI

I am definitely taking notice of this sector. I laughed it off for years. Guy I worked with gave us all some Doge when he left. We had bitcoin discussions probably around '13 or so. The idea of it as a payment system, mining as a way to secure the system, etc.

But the thing that always dissuaded me from moving $$ into it was the fact anyone could create a crypto on a whim. It was only when I started to really look at the ecosystem of each one that the bells went off. What is it used for, who is the market, etc.

I still have only really watched from the sidelines, but when exchanges started to be "hacked" and the idea of a decentralized exchange came to the forefront it really made me think.

A P2P payment system totally outside the control of authorities? How awesome would that be? Very empowering, to use a word that has been corrupted.

But when you click on the current reddit post you find out that it was a complete fucking lie, the OP was a first-time poster, his Bitfinex support ticket number was fake, and OP even deleted his post to try to make it go away but that's not how reddit works:

So did Bitfinex'd follow up on this rather serious allegation? Apparently not. Why not? You'd think it would be something he'd actually want to track if he was serious about getting at the truth. And if he did follow up, why didn't he tweet a retraction when he discovered it was fake news?

A lot of his tweets/posts are legit, he does link to some weak sources. But, he's reporting on an exchange with European directors, offices in Asia and incorporated in the Caribbean. They create USDT out of thin air and have front run BTC run to $20k, it's no secret. I've never seen this end well the past several years in crypto.

I would not be surprised to learn that he is a bitfinex employee, actually.

Create scare, induce people to buy BTC at inflated prices at bitfinex to escape tether (which bitfinex happily sells them from its own ammassed stock)- Then let everything settle down and start all over again. rinse. repeat.

And that is why the government's will put an end to it's use. When they determine which technology is the best they will copy or commandeer it to make crypto dollars, rubles, etc. Govs will never give up control of money.

As the US Congress (who are hardly discontent with their banking overlords) pointed out: "Since the DOJ is engaged in a criminal cover-up, we should have engaged a special prosecutor. But the cartel controls us too."

Too bad that ZH bloggers reward 'humor' and zingers far more than high grade info or insight. That tells us everything we need to know about how ZH demographics has changed / declined over time, and why most veteran bloggers have left or fallen silent.